State Bank Regulators Support Bill Restricting Online Payday Lending

Washington, D.C.— CSBS issued a letter of support today to Senator Jeff Merkley (D-OR) and Representative Suzanne Bonamici (D-OR) in strong support of the Stopping Abuse and Fraud in Electronic Lending Act of 2013 (the SAFE Lending Act).

In addition to overseeing state-chartered banks, CSBS’s members license and regulate a variety of non-bank financial services. This combined portfolio of regulatory responsibility provides state bank regulators with a comprehensive and detailed sense of local credit markets. In the letter, CSBS points out regulatory and supervisory challenges identified by state regulators with unlicensed and unregulated online payday lenders. The SAFE Lending Act (S.172, H.R.990) strengthens state authority and local accountability over illegal online payday lending activity and brings together state and federal regulators in a coordinated and collaborative manner to create a comprehensive and balanced regulatory regime.

“State financial regulation is a locally based and locally accountable regulatory regime focused on economic development and the health of local credit markets,” CSBS President and CEO John W. Ryan wrote. “Our members support the SAFE Lending Act because it ensures the applicability of state law to loans made to consumers within their state borders and it creates a more comprehensive state-federal enforcement regime for Internet payday lenders. The SAFE Lending Act empowers states to provide oversight in a manner that protects both consumers and companies that operate in accordance with state law.”

The Conference of State Bank Supervisors (CSBS) is the nationwide organization of banking regulators from all 50 states, the District of Columbia, Guam, Puerto Rico, and the U.S. Virgin Islands. State banking regulators supervise approximately 5,300 state‐chartered financial institutions. Further, most state banking departments also regulate a variety of non-bank financial services providers, including mortgage lenders. For more than a century, CSBS has given state supervisors a national forum to coordinate supervision of their regulated entities and to develop regulatory policy. CSBS also provides training to state banking and financial regulators and represents its members before Congress and the federal financial regulatory agencies.